Inception Micro Angel Fund

Executive Summary

Seed Angel:  A financial supporter in the early stages of a corporation’s existence.

The Inception Micro Angel Fund, LLC (IMAF-TRIAD II) is a member-managed seed stage angel capital fund designed to capitalize on the growth in entrepreneurial activity and venture financing, primarily in the Piedmont area of North Carolina, greater North Carolina and in selective areas of Virginia and South Carolina. IMAF-TRIAD II is part of North Carolina’s IMAF Family of Funds and the second fund following IMAF-TRIAD I.

Structure

IMAF-TRIAD II is a member-owned and member-managed limited liability company, organized to provide members an opportunity for active involvement in a diversified capital investment process.

Fund Size

$2.0 million

 

 

 

Goals

The fund will seek to enhance the wealth creation of its members by investing dollars as well as time and relationships in early stage, high quality, and high growth companies in the Piedmont area and other geographic areas if appropriate in order that those companies achieve success.

Member Profile

IMAF-TRIAD II's strength lies in its members—a group of highly successful men and women, from the medical, dental, legal, academic and corporate communities within the Piedmont area of North Carolina and in its disciplined investment model. 

All members are accredited investors by Securities and Exchange Commission definition.

 

Founders

Timothy R. Janke, JD; William G. Ward, Sr., MD; Charles Calkins, JD

Active Members

All members are encouraged to actively participate in the investment process, attending screening and monthly member presentations, making personal add-on investments as individually desired, and responding to Fund Executive requests for special expertise or input as he and members conduct due diligence on prospects and assist IMAF-TRIAD II's portfolio companies. It is understood that availability to participate may vary by member over the life of the fund and that some members will be more active than others.

Advisors

It is anticipated that “advisors” with venture capital experience will be selected to assist with information regarding trends and opportunities in their industry. This knowledge is valuable since venture funds are candidates to provide follow-on capital in the investment continuum.

Investment Criteria

IMAF-TRIAD II will use the following criteria, as guidelines, when considering companies for investment.

  • Invests in emerging, high growth companies, preferably (but not exclusively) located in, or near, the Piedmont region of North Carolina. These companies generally are seeking their earliest round of financing. They will typically be at the start-up stage or one step beyond start-up, will be in the process of selecting a management team, and will already have founder and/or “friends and family” money invested in the company.
  • Often invests in seed or start-up rounds.
  • Typically invests between $25,000 and $100,000 per company with a company board seat, or observer rights, being allocated to IMAF-TRIAD II.
  • Typically initiates and then co-invests with other venture capital funds, angel groups, or Super Angels (high net worth individuals who contribute large amounts to a company).
  • It is anticipated that IMAF-TRIAD II will invest in up to 15 portfolio companies, depending upon the total amount of capital committed.
  • It is anticipated that no more than 10% of IMAF-TRIAD II ’s fund size will be invested in any one company

Companies that receive investments from IMAF-TRIAD II possess:

  • An experienced, dedicated & motivated management & advisory team
    • With a sound business concept...
    • Coupled with leading edge technology or a unique product design...
    • And the opportunity to become a market leader.

How Decisions Are Made

The basic process for determining which companies IMAF-TRIAD II should invest in is flexible. With input from similar funds, IMAF-TRIAD II members will periodically review this process. In general, the process includes the receipt, logging, and screening of business plans with company presentations to the Administration Committee. The Administration Committee will evaluate the company through the due diligence process and make a recommendation to the membership at a General Member meeting. The general membership will vote as to whether or not to accept the Administration Committee recommendation regarding investment in a presenting company. A more detailed description of the evolving investment decision process is available.

Admin Committee Screening

The IMAF-TRIAD II Administrative Committee will have 4-6 members, elected to rotating terms by the members. It will provide the overall direction and administration of the Fund. Screening meetings will be open to all members and their active participation is encouraged.  Administration Committee responsibilities include, but are not limited to:

    1. Networking to find new opportunities
    2. Defining and managing the process of identifying new opportunities and conducting due diligence.
    3. Networking with other angel funds and venture funds to develop deals together and to obtain follow-on funding for IMAF-TRIAD companies.
    4. Meeting as required to screen new companies, analyze the results of due diligence, guide investment decisions options for members, and help formulate term sheets for those investments.
    5. Attending and presenting at monthly meetings to:
      • Present companies so that the entire membership can make decisions regarding fund investments and determine individual add-on investments opportunities, and
      • Update membership on general portfolio issues.
    6. Monitoring and managing the Due Diligence processes.

Administrative Costs/Structure

IMAF-TRIAD II will contract with a fund administrator to provide the administrative infrastructure.

    1. Administrator fees, based on committed funds and add-on investments, contracted annually, go towards the above administrative infrastructure/fund executive services.
    2. Carried interests on excess distributions from fund and add-on investments are provided for the above referenced administrative infrastructure/fund executive services

Add-on Investments

Add-on investments are opportunities for members to individually invest an additional amount of their own money alongside the Fund in portfolio companies that are of particular interest to individual members. For example, Company X may indicate that it is interested in a total investment from IMAF-TRIAD II of $50,000. The Fund may decide to invest $25,000 in the current round in Company X. That would leave an investment of up to $25,000 that could be available for members to invest in the current round on a pro rata basis of units held. In the event that certain members do not elect to take their pro rata portion of available add-ons, other members would have the opportunity to take more than their pro rata portion.

NC Tax Credit

An investment in IMAF-TRIAD II may entitle investors to a NC tax credit.  IMAF-TRIAD II is a certified Qualified Grantee Business because of an investment by the NC Biotechnology Center.  As a result,  investors in IMAF-TRIAD II can apply for a credit of up to 25% of the amount of his or her investment in IMAF-TRIAD II on the investor’s NC income tax return for the year following the year of investment.  This credit applies to investments paid prior to the end of 2010 and has been extended to include 2011.

Miscellaneous Start-up

If a member works with a portfolio company as a board member or in any major role, it will be up to the portfolio company and the member to negotiate an appropriate compensation plan.

Support

The Small Business & Technology Development Center(SBTDC) will play a significant role in assisting IMAF-TRIAD II.

 

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